Thus far, they are taking a completely different portion of the market that Apple has also thus far ceded.

It could be argued instead that the Kindle helps the iPad, as it has disemboweled the market for Android tablets; consumers either get a Kindle (low end entry) or an iPad (high end).

It's the same reason netbooks didn't hurt Apple; they only hurt the competition.

Yes, you're absolutely right.

The only way Android can compete with the iPad is by deep, deep discounts which squeezes out all their OEM's profits.

Google is being squashed like a toad on the road between the iPad Juggernaut and the orphan Android Kindle Fire which cuts out Google advertising.

Even the Kindle Fires can only be shifted by selling at a loss.

iPad's domination is so complete that they are making 100% of all the profits made by the entire tablet market. Probably even more than a 100% (if that was mathematically possible) if you take into account that most competition tablets are sold at a loss

That makes the iPad even more dominant than the iPod, which has 70% share of the entire MP3 market, and the iPhone which earns 75% of the profits of the entire mobile phone market.

The only way Android can compete with the iPad is by deep, deep discounts which squeezes out all their OEM's profits.

Google is being squashed like a toad on the road between the iPad Juggernaut and the orphan Android Kindle Fire which cuts out Google advertising.

Even the Kindle Fires can only be shifted by selling at a loss.

iPad's domination is so complete that they are making 100% of all the profits made by the entire tablet market. Probably even more than a 100% (if that was mathematically possible) if you take into account that most competition tablets are sold at a loss

That makes the iPad even more dominant than the iPod, which has 70% share of the entire MP3 market, and the iPhone which earns 75% of the profits of the entire mobile phone market.

And yet we get many posters saying that Apple needs a device that is clearly priced well below it would take to turn a profit.

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I suspect that Apple could make 40% + GP on a low-end iPad 2 a MSRP @ $299.

That sounds like a pretty steep price drop, particularly when Apple only had a $100 price difference between their iPhone 3Gs and iPhone 4, which looks to be roughly the difference in technology that we'll see with iPads 2 and 3. Even if they can do what you suggest, I don't think they need to do it, not yet. I wouldn't complain if they do, but I wouldn't get my hopes up.

The differences between the $399 iPad and the $599 version would not stop at the display. I would also expect that the $399 version would come with a slight modification in the processor as in a so-called A5X whereas the $599 version would come in with an A6 quad-core processor and a higher quality camera.

If Apple didn't offer a $399 entry point, then there would be a lot of balking at the notion of the price going from $499 to $599 but by offering two distinct models, Apple would be covering its bases. I think that while some customers would find a much higher resolution and faster processing compelling, others would be perfectly happy with a device that as we speak is happily being used by millions of customers around the world.

I don't think that more resolution, a faster processor and a much better camera can be delivered at much less than $200 just as no one finds it outrageous that the base model of the Macbook Air checks in at $999 yet the next step up is an additional $200 basically for more memory.

We're not talking about a $200 jump in price from the iPad 2 to the iPad 3. A high-resolution display is not something that Apple can or should be expected to serve up free of charge. By offering the old resolution even at a reduced price, Apple would be giving consumers a choice. Apple would be saying, the old technology is an option at $100 less than before or if you want the latest and greatest, there's a price for that. Millions would pay that price, I suspect, and the rest happily settle for a $399 iPad. Win/win all around.

Is this about Apple giving technology away because if it is, I think it bears reminding that Apple is a publicly traded entity that does consider making money an important part of the business plan. If there are enough people willing to pay $599 for a higher grade of iPad, why would Apple choose to not offer such a product. If at the same time, people looking for bang for the buck were well served, what's the downside?

A- Apple will not make a special A5 just for a lower model iPad 2.
B- The $200 more expensive 11" air is not just going from 2gb ram to 4gb- it doubles the storage from 64gb to 128gb- and it has a faster processor.
C- the iPad price won't raise. That isn't what apple does. So the models would be 599, 699, 799 and 3G (4G?) Would be $729, $829, $929. Sorry- I don't see a $1000+ iPad after tax.

That sounds like a pretty steep price drop, particularly when Apple only had a $100 price difference between their iPhone 3Gs and iPhone 4, which looks to be roughly the difference in technology that we'll see with iPads 2 and 3. Even if they can do what you suggest, I don't think they need to do it, not yet. I wouldn't complain if they do, but I wouldn't get my hopes up.

If Apple gets mfg. costs for a low-end iPad 2 to $200, then GP thru Apple stores and Apple online store for a $299 iPad 2 is 50'%.

I suspect Apple could sell to resellers for $230-$250 -- yielding a good markup for retail -- better than the KFC.

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

If Apple gets mfg. costs for a low-end iPad 2 to $200, then GP thru Apple stores and Apple online store for a $299 iPad 2 is 50'%.

I suspect Apple could sell to resellers for $230-$250 -- yielding a good markup for retail -- better than the KFC.

That is a big if. Apple already shook up the tablet market by coming in at half the believed price point. They also sell it with 16GB storage for less money than a 16GB iPhone retails for even when you don't consider the cost of the larger display and do consider the cellular HW.

Kindle Fire is selling in enoug quantity that economies of scale are in effect and ir's still losing money on each one at $199 with less than half the display area and missing a lot of HW an build quality the iPad has. Granted, Apple's economies of scale are surely greater than Amazon but their is a limit to volume cost savings.

Also, if it's $199 to manufacture the it's not $100 profit if sold at $299. Plenty of other associated costs. I assume the manufacture costs are not much past $199 for the current iPad.

Finally, I see no reason for Apple to get razor thin margins on a device it can barely keep in stock even at the end of its life. Even in the smartphone market where the iPhone is outsold by other headset vendors Apple is still commanding a lead in profits and even increasing its margins as of last quarter. I'll need a business reason to begin to see your point here.

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That is a big if. Apple already shook up the tablet market by coming in at half the believed price point. They also sell it with 16GB storage for less money than a 16GB iPhone retails for even when you don't consider the cost of the larger display and do consider the cellular HW.

Kindle Fire is selling in enoug quantity that economies of scale are in effect and ir's still losing money on each one at $199 with less than half the display area and missing a lot of HW an build quality the iPad has. Granted, Apple's economies of scale are surely greater than Amazon but their is a limit to volume cost savings.

Also, if it's $199 to manufacture the it's not $100 profit if sold at $299. Plenty of other associated costs. I assume the manufacture costs are not much past $199 for the current iPad.

Finally, I see no reason for Apple to get razor thin margins on a device it can barely keep in stock even at the end of its life. Even in the smartphone market where the iPhone is outsold by other headset vendors Apple is still commanding a lead in profits and even increasing its margins as of last quarter. I'll need a business reason to begin to see your point here.

I agree with most of what you say...

Except I would point you to 2010 and the $499 price...

This was for a new category, with no track record, no economies of scale, no guarantee of success -- nay ridicule and failure were predicted.

Today, everything is different -- time to finesse their gamble into success,.. That's the game!

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

This was for a new category, with no track record, no economies of scale, no guarantee of success -- nay ridicule and failure were predicted.

Today, everything is different -- time to finesse their gamble into success,.. That's the game!

There was no track record except for decades of failed tablets and definitely no guarantee of success but economies of scale was working for Apple on day one. Besides most of the internal parts being used in the iPhone and Touch already they would have sourced enough of the unique to iPad components to reduce cost over what other vendors could do.

That said, I'm sure since its debut they have reduced costs even more, but there is a plateau and there is a rhyme and reason for a retail price which is why I think that $399 is what you should expect for the year old 16GB WiFi iPad 2.

Also consider that in 2011 if the goal was to get to $299 that they could have dropped to $399 then and then if what you say about their profit margin is correct. They didn't so why now in 2012 would they drop it by 40% one day to the next? It just doesn't make any sense. Where is the business reason to lose that much in profit when you don't have to and when dropping it by $100 right now would surely sell out the lot.

PS: Why have you been putting the mark up for bold text at the end of your comments?

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There was no track record except for decades of failed tablets and definitely no guarantee of success but economies of scale was working for Apple on day one. Besides most of the internal parts being used in the iPhone and Touch already they would have sourced enough of the unique to iPad components to reduce cost over what other vendors could do.

That said, I'm sure since its debut they have reduced costs even more, but there is a plateau and there is a rhyme and reason for a retail price which is why I think that $399 is what you should expect for the year old 16GB WiFi iPad 2.

Also consider that in 2011 if the goal was to get to $299 that they could have dropped to $399 then and then if what you say about their profit margin is correct. They didn't so why now in 2012 would they drop it by 40% one day to the next? It just doesn't make any sense. Where is the business reason to lose that much in profit when you don't have to and when dropping it by $100 right now would surely sell out the lot.

PS: Why have you been putting the mark up for bold text at the end of your comments?

As to the PS... My eyesight is failing ang I prefer some whitespace above my sig.

Again, I can't argue with what you say..

Except, put aside smartphones for the moment...

The post-pc individual computer era is being born...

The opportunity to define this era is now... Not a year from now!

This is the only opportunity for bold moves...

"There is a tide in the affairs of men..."

PS... No bold after this...

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

As to the PS... My eyesight is failing ang I prefer some whitespace above my sig.

Again, I can't argue with what you say..

Except, put aside smartphones for the moment...

The post-pc individual computer era is being born...

The opportunity to define this era is now... Not a year from now!

This is the only opportunity for bold moves...

"There is a tide in the affairs of men..."

PS... No bold after this...

I understand the need for Apple to use 2012 to shatter any chance for the competition to make a dent. The 3rd iteration of the iPad and they will likely have iPod marketshare for the foreseeable future with simply adding a Retina Display at the same price point (assuming battery life is about the same). But can they do that without having to lower margins and go with a 40% reduction in retail pricing? I absolutely think they can... and will. You don't make money by not making a profit.

As for you adding the bold mark up I was simply curious. Add all the whitespace you wish.

This bot has been removed from circulation due to a malfunctioning morality chip.

I understand the need for Apple to use 2012 to shatter any chance for the competition to make a dent. The 3rd iteration of the iPad and they will likely have iPod marketshare for the foreseeable future with simply adding a Retina Display at the same price point (assuming battery life is about the same). But can they do that without having to lower margins and go with a 40% reduction in retail pricing? I absolutely think they can... and will. You don't make money by not making a profit.

As for you adding the bold mark up I was simply curious. Add all the whitespace you wish.

You may be right... (probably are)...

But, is Apple going to sit by and let the likes of Bezos usurp/chart the future -- as Sculley did with Gates?

Yech!

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

But, is Apple going to sit by and let the likes of Bezos chart the future -- as Sculley did with Gates?

Yech!

Bezo isn't doing anything worthwhile in the tablet space. The Kindle Fire is a beefed up eReader. It's to the iPad what netbooks are to notebooks. Ultimately those who buy the Kindle Fire and like the tablet form are more likely to buy a full tablet next and were likely not potential iPad customers beforehand. The Kindle Fire is also branching Android that weakens Google's vision of Android which is also good for Apple.

If Kindle comes out with a 10" Kindle Fire that has an IPS display at about 1280x800 display I can't see it being only $100 more and being able to make a profit. Note that the current Kindle Fire at $199 is pretty half or less than the iPad in every way so will doubling all that to compare to the iPad play out? I think Amazon would just hurt themselves even more they are already.

Note that the netbook market hurt Apple's marketshare when they were popular. They shot up and many thought that these were great and that Apple was stupid for not getting in the netbook game.

PS: There is something about this I like. Not from a consumer standpoint but I can see a certain market for it. I wonder if Apple has something like that in store. Not an iPad, mind you. Not a tablet, but perhaps a new device in the iPod Touch category or a new one called iBook.

I understand the need for Apple to use 2012 to shatter any chance for the competition to make a dent. The 3rd iteration of the iPad and they will likely have iPod marketshare for the foreseeable future with simply adding a Retina Display at the same price point (assuming battery life is about the same). But can they do that without having to lower margins and go with a 40% reduction in retail pricing? I absolutely think they can... and will. You don't make money by not making a profit.

As for you adding the bold mark up I was simply curious. Add all the whitespace you wish.

Second response to this post!

Obviously, you and I, both expect Apple to continue selling iPad 2 models in large quantities -- else our debate would have little meaning in Apple's profits and the greater scheme of things.

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

I hope that they can double the capacity for the same price points this year but I think that the Retina Display may effect the cost. I'm not even that convinced that the Retina Display will be cheap enough and in high enough yields to be on every iPad 3. I'm assuming 80-100 million iPads over the next year and possibly even making more profit than the iPhone.

For the event I think we'll have an updated iPod Touch, an updated AppleTV with 1080p, 1080p content on iTS, and then the iPad 3.

This bot has been removed from circulation due to a malfunctioning morality chip.

I hope that they can double the capacity for the same price points this year but I think that the Retina Display may effect the cost. I'm not even that convinced that the Retina Display will be cheap enough and in high enough yields to be on every iPad 3. I'm assuming 80-100 million iPads over the next year and possibly even making more profit than the iPhone.

For the event I think we'll have an updated iPod Touch, an updated AppleTV with 1080p, 1080p content on iTS, and then the iPad 3.

Great lineup... Can't argue... Makes sense...

So it was back in 2010 when everyone thought Apple's tablet would sell for $1100 or maybe even as low as $999...

Stupid damn Apple... What were they thinking of?

"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -

HD display for iPad3 then over the course of the next 18 months all Macs to be upgraded.
Complete differentiator to other manufactures. Was there not a comment in the last earnings call about a product transition?

MS hasn't made a bold move since the monkey danced at the developer's conference a few years back.

Which is fine. There is plenty of evidence in the nature that leaders (apex hunters) are less successful overall than those that follow. MS might not be very good at coming up with ideas but they tend to eventually make a good go at profiting from riding others innovation coattails. It's certainly working for Samsung.

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So you consider the Fire, with no cameras, no 3G, no GPS, an ancient , highly customized version of Android, little in the way of productive apps, as keeping Apple on its toes?

Yep, at $199 I do. I'm not saying Amazon is going to compete directly on the hardware level but their "cloud" solution works pretty damn good and their hardware is only going to get better as time goes along. Remember, Apple is only one generation back from having a tablet with no cameras or GPS on their Wi-Fi only model. I imagine Amazon including those in their next generation.

You better hope some one like Amazon can keep Apple on its toes otherwise expect the continuation of mysterious half-assed cloud solutions and processor spec bumps in the near future.

When the iPad 3 is released my Kindle will be used a heck of a lot less, but between it and my iPhone, the Kindle has served its purpose well up to now.

Quote:

Originally Posted by Michael Scrip

Half the size, half the storage, no cameras at all, not as many apps...

I'm all for competition... pushing others to innovate more.

But I really don't think Apple is taking notes from Amazon at this point.

Maybe if Apple made a tiny, cheaper version of the iPad... maybe...

Agreed, many fanboys though are missing the point. It can happen. Remember, the Fire is the only tablet to have some relevance 3 months after its release. Other than Apple Amazon is the only company to have some success at the tablet market, granted the Kindle and iPad are currently two different markets.

Quote:

Originally Posted by xSamplex

If they [amazon] sell a 10" machine at $250, it more or less forces Apple to drop the cost of entry. That's a good thing for consumers, if not the shareholders

Bingo!

Quote:

Originally Posted by Apple ][

Besides people who are desperately broke and people who don't have very high standards, what market is there for a 10" Amazon tablet?

With all your money I'm surprised your high standards allow you to hang with us commoners... Look, if Amazon can keep the price down I think there is plenty of room for them to be a player. Kindles may not be the solution for anyone who visits this site, but compared to the rest of the world we are in the minority compared to the number of people who don't yet own a tablet.

Apple is just crushing, and I hope they continue to do so, the potential tablet market is still too young and untapped to suggest "Apple has won".

Just say no to MacMall. They don't honor their promotions and won't respond to customer inquiries. There are better retailers out there.

Agreed, many fanboys though are missing the point. It can happen. Remember, the Fire is the only tablet to have some relevance 3 months after its release. Other than Apple Amazon is the only company to have some success at the tablet market, granted the Kindle and iPad are currently two different markets.

It might be a little early to say that Amazon has had a success with the Kindle Fire.

Sure... Amazon has sold millions of them... but they are essentially making ZERO dollars on each one.

This is a long-tail game where Amazon will have to make up profit with app sales, music and movies.

There are reports that Amazon will eventually make $186 from every Kindle Fire user. I hope they do.

It might be a little early to say that Amazon has had a success with the Kindle Fire.

Sure... Amazon has sold millions of them... but they are essentially making ZERO dollars on each one.

This is a long-tail game where Amazon will have to make up profit with app sales, music and movies.

There are reports that Amazon will eventually make $186 from every Kindle Fire user. I hope they do.

Agreed. I think Apple's business model is considerably better. Make money up front on the hardware AND later with content sales. I think Amazon could have gotten another $50 for the Fire and put a little money in the bank right from the start. Even if they would have went with $225 that would have given them an extra ~ $75 mil on 3 mil units. I doubt there would have been any lost sales because of an extra $25, especially at Christmas time.

Thanks Michael for the intelligent discussion. You don't see a whole lot of that in these forums...

Just say no to MacMall. They don't honor their promotions and won't respond to customer inquiries. There are better retailers out there.

Don't think that will happen. If Apple does consider selling a lower price iPad, I think they should make up the margins lost by selling the new iPad 3 as the iPad HD Pro (retina display) at $599. However, Apple doesn't usually raise prices for newer products, so this ain't gonna happen.

Hell go to Apple.com you can get an Apple Certified Refurbished iPad 16GB for $299 when they have them

I hope that they can double the capacity for the same price points this year but I think that the Retina Display may effect the cost. I'm not even that convinced that the Retina Display will be cheap enough and in high enough yields to be on every iPad 3. I'm assuming 80-100 million iPads over the next year and possibly even making more profit than the iPhone.

A $399 iPad2 would basically shut down android tablet sales except for on the very low end of $99 garbage tablets.

It really is the competition's worst nightmare, especially with a reveal right after MWC. Talk about sucking the wind out of their sails.

Unless there is some utterly innovative show stopper revealed at MWC, I can't see anything standing toe to toe with the iPad3 and not getting crushed.